The Italian has stated that the extra capital needs for some leveraged entities will continue
The European Central Bank (ECB) has informed investment banks around the world of the number of employees and the configuration of their trading desks in the euro area, putting an end to the efforts begun with the departure of the United Kingdom. of the European Union, as explained Andrea Enria, president of the ECB Supervisory Board.
“We have just sent the banks final decisions on what we want them to do with respect to individual tables,” Enria said. “Some of them already have sufficient risk management capabilities at those desks, others must reinforce them. The banks know what they have to do, they have a certain deadline to meet our requirements,” he said in an interview with Bloomberg News. by Europa Press.
However, Enria has stated that “the corner has already been turned”, to which the manager has shown himself to be “very proud” of the transition process. “It has not been a territorial takeover of business. It has been very prudent, very focused on risk management,” he said.
Major banks moved hundreds of billions of dollars in assets and thousands of jobs to the EU in order to maintain access to clients there, after Brexit severed many of the UK’s ties with the bloc. .
Following that unprecedented influx, the ECB carried out a “transparent” investigation to ensure that European lending trades did not remain too tied to London.
Banks also have to get approval from the ECB for certain mathematical risk models they use to run their business, resulting in a “huge bottleneck.” “The process is very advanced and we are close to the situation in which they would be like any other bank under our supervision,” he assured.
Although at first the new banks “had the mentality of minimizing any change”, they are now beginning to look at how to develop their business in the European banking union, Enria said.
SURCHARGES
On the other hand, Enria has stated that the ECB will withdraw the penalties for extra capital needs to which some financial institutions are subjected after having solved their leverage problems.
However, the Italian has not given specific names and has recalled that some banks will continue with these requirements “for some time more”, and has made it clear that “probably” will require extra capital from more firms next year.
